Grain Insights

The Grain Hedge Team provides a macro-focused daily view of the world’s grain markets. Kevin McNew received a bachelor’s degree from Oklahoma State University and his master’s and Ph.D. degrees in Economics from North Carolina State University. He spent 10 years as a Professor of Economics with the University of Maryland and Montana State University focusing on commodity markets and is widely regarded for his ability to boil-down complex economic situations into easy-to-understand concepts for applied life.

Huge Corn Export Sales

Mar 06, 2014

Grains were mixed overnight with soybeans adding 10 cents a bushel to the front-month May contract. Corn and wheat came under pressure with 2 and 4 cent declines, respectively.

Nearby corn prices hit a 6-month high yesterday on continued unrest in Ukraine and the potential for improved US export deals. China is beginning the process to approve Syngenta’s MIR162 genetically modified corn after the firm submitted additional material to authorities in November. Vice Agriculture Minister Niu Dun said "The approval process would go through very quickly," the Minster went on to say it could be approved in the first half of 2014, depending on the agriculture ministry's biosafety committee. In Ukraine, farmers are holding grain to hedge against a devaluing currency. In addition, trading houses are becoming reluctant to enter into new contracts and as a result, the instability could create opportunities for additional U.S. exports to North Africa, the Middle East, and China. In ethanol, weekly US production was off 11,000 barrels per week to the lowest levels since early January. Production levels are still seasonally very strong, and we tend to see weekly production increase into the summer months. Even though production was lower on the week, crush margins were actually up 30 cents this week to $2.81 per bushel. These are the highest levels since Chinese cancellations of US DDG shipments slashed domestic crush margins in early January. Old-crop corn export sales released this morning were huge at 1.5 MMT for the week, nearly doubling the high end of trade projections.

For soybeans, prices continue to consolidate above $14 on the nearby May contract. The recent move has seen an intra-day high of $14.45 but prices are building around the $14.30 level this morning. On Wednesday, USDA announced China had cancelled 245,000 MT of US bean purchases. However, weekly sales were still strong for old-crop and beat expectations

In wheat, prices have come down three days in a row after a strong rally helped push large fund traders to cover their short positions. Dry weather in the Plains and Australia give some impetus for the price increase, as does the unrest in Ukraine. However, Ukraine is mostly done for the season on wheat exports with much of their activity going towards corn.